Twitter Agrees To Stay In SF If Tax Break Approved

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6:05 PM:Twitter officials told San Francisco city leaders on Tuesday that the company plans to lease offices in the city’s Mid-Market neighborhood if it receives a payroll tax exemption.

The exemption proposal was considered at a Board of Supervisors budget and finance subcommittee hearing today, and could be voted on by the full board as soon as March 29.

Twitter’s letter, sent to Mayor Ed Lee, Board President David Chiu and Supervisor Jane Kim–three of the legislation’s sponsors–was sent by the microblogging company’s chief financial officer, Ali Rowghani.

The letter confirmed Twitter’s tentative plans to move to the San Francisco Mart building on the southwest corner of Market and Ninth streets, but said the move was “contingent on the Board of Supervisors’ approval of the payroll tax exemption … without which Twitter would not be able to justify the cost burden of staying in San Francisco.

Twitter estimates that staying in San Francisco would cost Twitter more than $30 million over five years in rent, taxes and other expenses.

The company, currently based at a smaller office in the city’s South of Market neighborhood, has considered moving down the Peninsula to a city that has no payroll taxes.

San Francisco levies payroll taxes on all companies with payrolls above $250,000.
At today’s subcommittee hearing, dozens of people spoke out in favor of and against the proposal, which would also extend to businesses in other parts of the Mid-Market neighborhood and is designed to revitalize a part of the city affected by blight and public safety issues.

Amy Cohen, of the Mayor’s Office of Economic and Workforce Development, said the proposal “is not a silver bullet” to address those problems, “but it is a game-changing tool.”
Former Supervisor Chris Daly spoke in opposition during the public comment period of the hearing.

“We’re talking about giving away $22 million,” the estimated amount of payroll taxes that would be lost in the proposal, “to a company valued in the billions,” Daly said.

Two current supervisors also expressed reservations about the proposal.

Supervisor John Avalos pointed out that “there are many businesses that are struggling that don’t get these advantages,” while Supervisor Ross Mirkarimi questioned why the proposal was expanded to include other nearby businesses.

“Why the orbit … when the impetus is Twitter alone?” Mirkarimi said.

Kim said amendments added to the proposal today will “ensure this tax exemption is as targeted as possible” by deleting buildings with historically low vacancy rates.

Because the proposal was amended, it will have to return to the subcommittee next Wednesday, where it could be sent to the full board to be voted on as soon as March 29.

Twitter’s letter said if the exemption is approved, the company is committed to signing a lease that will keep Twitter in San Francisco for six years and likely for a subsequent 10-year renewal term.

The letter said the company’s “roots are in San Francisco, and we are hopeful that we can continue to participate in the innovation and vibrancy that has characterized this city.”
The mayor issued a statement after receiving the letter, saying he will work closely with the board to ensure that the proposal passes.

“This is the moment we have been waiting for in our Mid-Market area,” Lee said. “The transformative nature of an anchor tenant like Twitter will revitalize this community, create jobs and stimulate our economy at a time when we need it most.”

1:25 PM: Twitter officials sent a letter to San Francisco city leaders on Tuesday announcing that the company has signed a letter of intent to lease offices in the Mid-Market neighborhood, provided that it receives a payroll tax exemption.

The proposal for the exemption was discussed this morning by the Board of Supervisors’ budget and finance subcommittee, and could be voted on by the full board in the coming weeks.

Twitter’s letter, addressed to Mayor Ed Lee, Board President David Chiu and Supervisor Jane Kim, was sent by the company’s chief financial officer, Ali Rowghani.

The letter confirms Twitter’s tentative plans to move to the Furniture Mart building at Ninth and Market streets but states that the move “is contingent on the Board of Supervisors’ approval of the payroll tax exemption … without which Twitter would not be able to justify the cost burden of staying in San Francisco.”

The company, now located in San Francisco’s South of Market neighborhood, has considered moving to a city on the Peninsula that has no payroll taxes.

San Francisco levies taxes on all companies with payrolls above $250,000.

Any other company in the Mid-Market area that pays payroll taxes would also be eligible for the exemption.

The board’s subcommittee this morning was considering amendments to the proposal that, if approved, would delay sending it to the full board for at least two weeks.

Proponents of the proposal argue that it would revitalize a part of the city affected by blight and crime, while opponents have worried it would give away potential tax revenue at a time when the city faces a $380 million budget deficit.

Twitter’s letter state the company’s “roots are in San Francisco, and we are hopeful that we can continue to participate in the innovation and vibrancy that has characterized this city.”

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Josh

So, what are we losing if they don’t stay, because a 20 + million dollar tax break for a company with less than 350 people, (Of which how many work off-site?) doesn’t seem to make sense.

To put this in perspective, Cole Hardware has approximately 200 employees, as a small business they pay their taxes, and at least children go into their stores if they get lost (They’re part of a safe neighborhood program.)

No kid is going to ride the elevator up to Twitter if they get lost in the big city and sit around twitting while they wait for their parent to find them.

Greg Dewar

I guess we learned nothing from Dot Com Bomb 1, but that makes sense because that politicians that pushed this weren’t in SF at the time, or if they were, they weren’t paying attention.

Jamison Wieser

So what $30 million in services or infrastructure does the Board of Supervisors plan to cut to give this $7 billion company a tax break? Education, health, Muni? How many city employees would be laid off by that?